Nonprofit behavioral health provider Sheppard Pratt and private equity firm Concord Health Partners have stepped up their years-long partnership focused on solving major behavioral health industry challenges.
The two organizations seek to bring legacy nonprofit knowledge and PE investment savvy together in a new behavioral health-focused innovation and investment fund.
The partnership will focus on finding and backing companies that use technology to address systemic issues at scale, the leaders of both organizations to Behavioral Health Business.
Dr. Harsh Trivedi, CEO and president of Sheppard Pratt, one of the nation’s largest behavioral health and human services nonprofits, will step into the role of special adviser at Summit, New Jersey-based Concord Health Partners.
Trivedi retains his role at Sheppard Pratt, which employed over 5,000 people and brought in $400.5 million in revenue during its fiscal year 2022, according to its latest annual report.
“We are utilizing this as kind of like a skunkworks, or an [opportunity] to disrupt the broader behavioral health market,” Trivedi told BHB, “not through our brick and mortar but by engaging in a project that involves [the American Hospital Association] as well as other limited partners that are health systems to fundamentally shift care. That’s a model that’s very different.”
Trivedi first engaged with Concord Health Partners while he was an American Hospital Association (AMA) board member and a member of the industry organization’s investment committee. Concord Health Partners closed its first fund in 2019, a fund in which AMA was the anchor limited partner (LP) and more than a dozen large health systems joined as LPs, Concord founder and managing partner James Olsen told BHB.
Sheppard Pratt and about 30 LPs that include health systems, payers and a large physician practice joined Concord Health Partners’ second fund.
Called Concord Innovation Fund II, it has about $150 million to invest in growth-stage companies that have innovative technologies, improve care access, improve quality or lower costs. The fund will have an eye for behavioral health companies. Concord Health Partners announced the fund’s close in September 2022.
This fund co-led an investment round in the Austin, Texas-based telepsychiatry provider Iris Telehealth. In April 2022, Iris Telehealth announced it closed a $40 million Series B round to help it continue its national expansion.
What the Sheppard Pratt-Concord partnership looks like
Iris Telehealth is an example of investments that Concord Health Partners and Sheppard Pratt are looking for to address major, historical issues in behavioral health — in this case, access to psychiatrists.
“When patients come into the ED, they often don’t have the appropriate clinicians available to care for that patient at the point of care,” Olsen said. “Patients are sitting in the ED for days and weeks sometimes and then they’re discharged and it takes six or nine months to get an appointment with the appropriate clinician.”
Trivedi will advise Concord Health Partners on which companies have the best potential for solving problems in the behavioral health industry. Sheppard Pratt, as an organization, will test these solutions at scale. Other LPs will also test potential solutions.
These two points of engagement with startups and other maturing companies will aid in the “evolutionary changes” needed to succeed, Trivedi said.
Pairing the expertise of Concord Health Partners and Sheppard Pratt also could open the door to accelerated innovation compared to other investment settings.
“We understand the top priorities, the pain points, the challenges that the providers and payers are experiencing,” Olsen said. “That really helps to inform where we spend our time and energy looking for best-in-class platforms with technologies and solutions that are broadly relevant to the industry.”
Another example of an investment that could have wide-ranging impacts, according to Olsen, is Concord Health Partners’ backing of Post Acute Analytics. The Lewisville, Texas-based software company offers patient tracking and analytics services.
While in the post-acute care space, Post Acute Analytics’ system can assess a patient ideal setting or ideal provider type based on local and real-time data.
“We would like to find a company that is managing a patient across the behavioral health continuum through assessment tools, through technology, through AI, so that the patient can be managed much more effectively, and you can do that at scale,” Olsen said. “That is cutting edge. It’s not broadly in place, but it should be someday.”
Trivedi said that the behavioral health industry’s pain points are well understood. But the problem is that many present solutions are too narrow in terms of population or treatment type. The market is looking for and needs something that is broadly applicable and can help address the “log jams” in the system, especially around patient experiences.
“What we are trying to do, with the other LPs, is identify where those needs are and then turning to the market to either find the solutions or to work with some of our portfolio companies to say, ‘You’re doing this how can we also meet this partner needs?'” Trivedi said. “The other part of the strategy is more than simply investing in the company or sitting on the board.
“There is this active feedback loop between the LPs and the portfolio companies.”
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